We’ve got big time event risk this week for both the Greenback and Loonie this week, so it’s time to adjust once again to lock in a profit.
Trade Adjustment: Locking in Profit on USD/CAD Short
In case you haven’t done your prep work for the week, go back and read Forex Gump’s Forex Market Weekly Outlook. There you’ll see we’ve got big events that will likely shake up USD/CAD’s price action, most notably the FOMC meeting and U.S. jobs data for the Greenback and the monthly GDP report from Canada.
I’ve got a small profit in my USD/CAD short with the trade up almost pips, and I don’t want to give much of that back if the upcoming events spark a bullish reaction from the market (e.g., hawkish Fed, strong U.S. jobs or weak GDP from Canada are likely scenarios).
So I decided to roll down my stop once again to 1.2410, which is above the latest consolidation area. If it the market breaks above that consolidation zone, it could draw in further buyers and I don’t wanna give back much more than that.
This adjustment locks in a 0.25% gain on my original risk of 0.50%, making it essentially a risk-free trade. So, if the market goes back up I have a pretty good return-on-risk for a swing trade, and if it goes down, I’ll look to potentially add to the position below the consolidation area to maximize my profit–depending on what we get from the FOMC meeting and the economic data.
Let’s see how it all goes down this week, and stay tuned for a potentially fresh idea that I’m working on for AUD/JPY. Until then, good luck and good trading!
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